Building portfolio: Trading strategies for the financial market

trading area

From there you control your funds and can buy new positions and sell old ones. What your own portfolio looks like depends on your trading strategy. Basically, there are a variety of strategies, but they can be briefly divided into three main categories:

  •     Passive Trading
  •     Active Trading
  •     Speculative Trading

Every investor should diversify his own portfolio.

Passive traders invest for the long term and usually for their own retirement or future events for which money is needed. The passive trader is rather risk averse and does not want to deal with the markets every day. This type of investor relies on the buy-and-hold approach. This means that he does not want to take advantage of market movements. Rather, the goal is to take advantage of the growth in the markets over the long term.

Passive Trading

The passive trader invests for the long term and usually for his own retirement or future events for which money is needed. The passive trader is rather risk averse and does not want to deal with the markets every day. This type of investor relies on the buy-and-hold approach. This means that he does not want to take advantage of market movements. Rather, the goal is to take advantage of the growth in the markets over the long term.

Such an investor should focus on trading instruments that are in markets that are hardly subject to fluctuations. This often means that the return is lower, but the risk of loss is lower than with other investments. In addition, such investors like to invest already in diversified investments. Exchange traded funds (ETFs) are conceivable for this purpose. Here, investments are made in an entire market that is based on a benchmark index. A fund is also a possibility. These also often invest in markets or sectors, but are not linked to an index. Instead, they are actively managed by fund managers.

Active trading

An active trader is much more risky. He wants to invest in the stock market or other markets in the short term and not take any developments with him. Instead, short fluctuations in the market are to be exploited in order to generate the highest possible and at the same time fast returns. This type of investment likes to invest in individual stocks or also Forex. Cryptocurrencies are also eligible. The markets are deliberately selected while they are volatile. The market potentials are to be exploited using mt4 from Exness as quickly as possible.

trading forex in terminal

To achieve this, this investor needs time to familiarize himself with the markets and identify suitable market potentials. Analysis and continuous observation of the markets are a must.

Speculative Trading

Lastly, there are the speculative traders who often act as investors, day traders or intra-day traders. They are extremely risky and act speculatively. Almost every minute, the markets must be analyzed and monitored to get out high returns on this investment. Especially CFD trading can hold advantages for these traders. With this trading strategy you bet on whether prices fall or rise. Likewise, these traders often use the leverage effect. A leveraged security convinces in two ways: On the one hand, traders can generate high returns with low capital investment. On the other hand, the leverage leverages the return. This ultimately means that when the price increases, the return also increases exponentially. Leveraged certificates or other investments are conceivable.

 

 

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